First off, you might want to ask the admins / mods to move this to the Tanks and Seats section, where the tank experts are more likely to see it.
Most tanks can be saved, though it might not be economical to do so. That being said, there is good advice on how to de-rust old tanks available on the 'net, including on this site, for example, this thread:
http://dotheton.com/index.php?topic=4564
IMO, you have nothing to lose by trying to save that tank. Begin by using a solution, such as Evapo-Rust; Rusteco; Zep Calcium, Lime and Rust Remover; diluted muriatic acid, or whatever else you think would work for you. I can attest to the quality of Evapo-Rust, which is biodegradeable and won't harm the environment. Evapo-Rust is available across the US at Autozone; I always find it near the paint display...
Once you've cleaned the tank with some type of solution or solvent, you'll have a better idea of the real internal condition of the tank. If derusting it opens pinholes and makes it leak, you'll know that the tank requires more expensive repair, and that will help you decide whether to continue trying to repair the tank, or to look for another.
Evapo-Rust isn't expensive, it isn't toxic or caustic, it won't burn or blind you, and it won't remove the paint from the tank. Other solutions, such as muriatic acid and Zep CLR are toxic, and harmful, and they WILL remove the paint, so only you can decide which method to use. Whatever you choose, keep your costs down; if you decide to scrap the tank, it won't have cost you $200 to learn that the tank is junk.
Once you've got the metal cleaned, coat the tank to prevent it from flash-rusting. Then examine the tank inside and out, looking for pinholes and weak, rusty metal under the paint, especially near the bottom seams of the tank, any low spots where condensation can collect inside the tank, and at all seams and joints. Pay CLOSE attention to the bottom of the tank; although a tank can leak from any point, fluids sit in the bottom of the tank for extended periods of time, and that is where rust has the best chance of weakening the metal.
If you're satisfied with the basic integrity of the tank, you can then decide whether to use POR-15 (or another product) to seal the tank. Though I've had some good results with Kreem, a lot depends on the condition of the tank, and the preparation of the metal BEFORE the Kreem is applied. If the tank isn't CLEAN and DRY, you WILL run into problems over time...
Good luck; hope this information helps you.. kd